Are there sell-offs for real estate?

Have you ever heard of masses of people selling off their real estate based on fear or panic? Maybe a few but not enough to crash the entire system! Sell-offs for real estate are not likely do to it’s ill-liquidity which is a unique trait and in itself is a safe-guard.

Remember that little incident that started back in 1929 and lasted till World War II called the Great Depression?

Massive numbers of stock investors panicked because another group of stock holders rapidly sold their paper which signaled values were headed down.

Their paper holdings in stocks, bonds, and commodities were now a “problem” and they needed to unload as fast as possible. Seeing this unstable situation the masses followed suite and tried to dump their paper which resulted in the crash of 1929.

This caused a predictable and reliable outcome of sharp decline in the “value” of those assets. Money was being lost and loans weren’t getting paid.

People then tried to withdraw their savings from bank accounts. When they did this the banks shut their doors because they had nothing in their vaults. It had all been loaned out! This is still the practice today but more on that in another post.

During this time of unprecedented economic turmoil, quietly behind the scenes people like the Rockefeller family were buying up tons of real estate for pennies on the dollar.

Those properties were then rented which produced monthly income and eventually as time passed and the economy strengthened those properties increased in value, making the Rockefeller family the first billionaires in history!

On top of that, many much smaller or less affluent people were doing the exact same thing. Buy steeply discounted properties, rent them out, and sell them later when the value returned with demand.

Who’s holding down the fort?

Why don’t tenants, landlords or homeowners just pick up and leave town when the Fed meets for another big monetary policy change or when a catastrophe occurs in another country, or even when the stock market takes a dive?

Like I mentioned before in other posts, real estate is local and very unique. Some areas of the real estate market may be affected while most of it will not be and even if it is, you can still find great deals to profit from.

Real estate is also more complex than buying a piece of paper and “holding” it for a few decades. Real estate transactions require insurance, financing, utility contracts, lease contracts, title research and reports, and lots of paperwork. Selling on a whim is not easily accomplished.

Some may view this as a roadblock and I would agree with them; a roadblock to those forces in the world that can devastate paper assets!